quote:That assumption of 12 percent a year return in the stock market is a BIG assumption.

People get stuck on that point, and I don't repeat it because of the controversey. Ramsay is not wrong when he says 12% (although lately, he says 10 to 12 percent, interestingly), because that is a good average - the problem is - if you start on a -2% year, you spend a good while trying to catch up. All of his principles are fundamentally sound, though, even if the 12% is optimistic.

Which is better? Paying 2.9% to 8% (or more), APR, for 60 months, or making 7% on your $425 per month?

quote:Ramsey fills ignorant people with delusions of being millionaires by 40.

I disagree. If you're sophisicated about money, Ramsey isn't going to help you. If you're like most Americans, "paycheck to paycheck", there is little question the Baby Steps work. Most people are just emotionally unsuitable to handle their own money, but also too broke for somebody else to handle it.

Sure, the OASDI comes out every month and people with good jobs have 401ks and/or pensions, but as far as their operating budget, many people with 6-figure incomes literally live paycheck to paycheck. What Ramsey's method (where on here did I say it was perfect?) does is give people with nothing a starting point and a plan. And there's nothing wrong with a budget, a plan and goals ($1 million by 45 is NOT out of reach for a 20 to 25 year old just starting out, but even if that doesn't happen, the same person will be better in 95 cases out of 100, following the Baby Steps).

He encourages budgeting, saving, living within your means and avoiding debt at all costs. It may not be for everybody, but where is the flaw in that methodology for the vast majority of American households?

quote:He encourages budgeting, living within your means and avoiding debt at all costs. It may not be for everybody, but where is the flaw in that methodology for the vast majority of American households?

Motherfricking this. I don't find Ramsey's advice particularly useful for me but the country would be a much better place if more people with simple personal finances followed his methods. As silly/simplistic as they can be at times... They WORK.

They may not be aggressive enough for someone who is knowledgable about this stuff, but they sure as hell aren't going to get you in trouble.

quote:Ramsey fills ignorant people with delusions of being millionaires by 40.

Incorrect. Ramsey is a blessing to the ignorant. Dumb people should treat his word as gospel.

The problem is he dupes a lot of young people who would never live like the callers on his shows, and uses the religion to do so. If I lived like Dave Ramsey preached I'd be 250k poorer today. That is fact.

I'm talking about otherwise intelligent people who think they will be millionaires by 40 because they pay cash when they go out to eat. The 12% rate of return Ramsey uses to predict investment returns is unrealistic especially when factoring in inflation.

quote:I'm talking about otherwise intelligent people who think they will be millionaires by 40 because they pay cash when they go out to eat. The 12% rate of return Ramsey uses to predict investment returns is unrealistic especially when factoring in inflation.

Ramsey's advice is generally sound and the philosophy will be successful for 90+% of Americans. His specifics do not have to be spot on for the philosophy of the system to work. It absolutely works.

quote:I'm talking about otherwise intelligent people who think they will be millionaires by 40 because they pay cash when they go out to eat. The 12% rate of return Ramsey uses to predict investment returns is unrealistic especially when factoring in inflation.

If no one gets to factor in inflation, there are very few millionaires in this world.

But I get what you are saying. It's the steadfast message of Ramsey that bugs me, because while its right for all his callers, it's wrong for a large % of his listeners.

quote:Ramsey's advice is generally sound and the philosophy will be successful for 90+% of Americans. His specifics do not have to be spot on for the philosophy of the system to work. It absolutely works.

I've always viewed Ramsey as a guy who provides a service to people that really need financial help. If you're in a good place financially and you know what you're doing he's not making his pitch to you.

quote:I've always viewed Ramsey as a guy who provides a service to people that really need financial help. If you're in a good place financially and you know what you're doing he's not making his pitch to you.

When your mid 20's and still influenced by others, especially in your religious sect, is the problem I have. I guess it's magnified since I live 10 minutes from Dave Ramsey's Financial Peace Plaza.

quote:When your mid 20's and still influenced by others, especially in your religious sect, is the problem I have. I guess it's magnified since I live 10 minutes from Dave Ramsey's Financial Peace Plaza.

Okay, in order the Baby Steps are:

1. $1000 emergency fund

2. Pay off ALL debt, except the mortgage on the primary home.

3. 3 to 6 months expenses

4. 15% household income into retirement

5. College funding for children

6. Pay off mortgage early

7. Build wealth/give

Regardless of how sophisticated you are, or where your priorities are, these sequential steps - whetehr you're hearing them at church, on the radio or see them posted on your fridge - there's NOTHING wrong with the steps, nothing at all. There's nothing wrong in avoiding consumer debt. Yes, there are a bunch of guys who should consult with tax advisors about the specifics of Step 4, 5 and 6, to see which tool is correct.

Ramsey likes mutual funds and suggests that 12% is a sustainable APR over the long haul - maybe it is and maybe it isn't, but "Mutual Fund" investing isn't part of the Baby Steps.

I think he comes across as smug and self-righteous at times, but when pressed, he really gives the advice he believes is the right choice for the person to whom he's speaking - what else do you want?

I know, for a fact, that 90% of Americans (or more), would be far better served by following the baby steps than almost any other financial decision they can make, aside from furthering their eduction to get the next higher tier job.

You guys attacking the messenger, the "12%" thing and/or mutual funds are missing the forest for the trees.

Avoiding it I would be 250k poorer than I am today. I wouldn't have been wrong to avoid debt, I'd just be poorer. Look up the demographics and median income of Williamson County, particularly Franklin and Brentwood. Dave Ramsey advice is bad for the majority of people in these communities. these are my clients. I see what goes on with his ELP's. No offense, but you don't know shite.

quote:And you consider this to be a fairly common, typical use of consumer debt by the average American?

Of course not. I have defended Ramsey in every post I have made with regards to that. Most people are idiots.

But again, where I have diverged is this "one size fits all" financial path. It's foolish for a majority of people living in Dave's backyard here. But he's infiltrated the churches, and steered people into a lifestyle that's not the best fit. Will they be poor if they follow? Of course not. Will they have less wealth? In many cases yes. And the average demographic here is not a DR caller lifestyle. So it's more of a scare tactic vs actual financial smarts.

In closing I'll say anyone making 90k or greater in their 20's working in the corporate sect of companies like Bridgestone, Tractor Supply, Nissan, etc... With no bipolar credit habits who wouldn't secure 30 years of 3.5% money for as long as possible with paying as little as possible upfront, especially given inflation with a capital "I" that's coming, is being given bad advice.

Furthermore, anyone who would pay more to secure this money from someone just because they are an ELP of Ramsey, has been brainwashed.

But I see it or hear about it constantly.

FYI at 14k Dow on Friday I retreated. I am 60.2% in cash in my IRA. This approach may not be the best for everyone.

quote:But again, where I have diverged is this "one size fits all" financial path.

Obviously, I competely agree with you on this point. I direct broke people (and myself when I was broke) to the Baby Steps. It certainly is not nearly as subject to the A/B analysis you've shown here.

quote:But he's infiltrated the churches, and steered people into a lifestyle that's not the best fit.

From a certain philosophical way, people who are attracted to the approach, and are not seeking good, independent financial advice - this probably is the best approach.

quote:With no bipolar credit habits who wouldn't secure 30 years of 3.5% money for as long as possible with paying as little as possible upfront, especially given inflation with a capital "I" that's coming, is being given bad advice.

While that is the correct call under a lot of different circumstances, in a financial crisis being debt free has advantages over being leveraged and you know this. The fact that you made credit work for you is not universally applicable - many people get eaten up on compound interest, continually refinance and draw money out until they're sitting in front of a bankruptcy trustee or starting over somewhere else (or both).

quote:Furthermore, anyone who would pay more to secure this money from someone just because they are an ELP of Ramsey, has been brainwashed.

I agree with you on that - I have always skeptical of the ELP program - there are probably good ones, but every person's situation is different, and financial advice should be independently sought and the advisor should, first and foremost, owe a duty to the client who trusted him with his money, rather than the principles of some referral program - regardless of the intentions and motivations of the founder of said program.

quote:But I see it or hear about it constantly.

And I understand this is the source of a good bit of your frustration with the topic.

quote:FYI at 14k Dow on Friday I retreated. I am 60.2% in cash in my IRA. This approach may not be the best for everyone.

I think that's a safe bet. I considered switching to about 50/50 equities/cash-equivalent myself, but I resisted.